Global Strategy+Uncertainty+Risk | The School of Business | The George Washington University

Corporate Responses to Disasters

I have coordinated a collaborative project with researchers in Wharton and UPenn’s Department of Computer and Information Science to build one of the largest databases on non-market responses at the international level. It covers every monetary and in-kind donation from firms, governments, multinational agencies, and non-governmental organizations reported in news media to the relief and recovery fund of all natural disasters that affected the world from 1990 to 2015.[1]

The database provides information on the donor organization, the characteristics of the donation (i.e., in-kind, monetary or both, amount, currency, and timing), the target entity (i.e., government agency, NGO, or victim group), the target area or sector (e.g., rebuilding of schools), the initiator within the firm (i.e., employees or top management), and the organizational vehicle (e.g., subsidiary, group of employees, department or unit).

Regarding aid from business organizations, we have coded all the reported donations made for disasters occurring between 2003 and 2015, inclusive, covering:

93,247 donations

38,980 firms from 83-headquarters countries

4,637 natural disasters

176 disaster-stricken countries.

For different studies, I have merged this proprietary database with several other event-specific (e.g., Swiss Re’s SIGMA database on disaster insurance), country-specific (e.g., The World Bank’s World Development Indicators), and firm-specific (e.g., Lexis Nexis’ Corporate Affiliations and Capital IQ) databases. These data have helped me and other researchers explore questions on the themes and areas of :

Corporate provision of collective goods

First- and follower-mover advantage.

Firm-market reliance.

Market entry.

Effects of uncertainty shocks on decision-making.

Stakeholder relationships.

Some brief takeaways of this empirical setting :

Corporate disaster giving is one of the fastest growing non-market strategies. Nowadays, nine in every 10 large multinational enterprises engage in corporate giving in the aftermath of natural disasters, compared to three 15 years ago, when the average disaster donation was 10 times smaller than it is today.

Business organizations are becoming an important finacial source of major disasters worlwide. For at least three major natural disasters in the last five years, corporate disaster giving has surpassed the aggregated contribution of foreign governments, multilateral agencies, NGOs, and private charity.

And regarding the potential consequences:

Corporate disaster giving has a strategic value for the firm. On average, a firm with operations in a disaster-stricken country that engages in disaster giving outperforms a similar firm that does not by a magnitude of 24% of annual local revenue. If such firm bundles its core operation with disaster giving, it will be 6.5 times, on average, more likely to accrue rents in comparison with a similar company that lacks such attribute.

Corporate disaster giving is socially effective. Countries that receive at least 44% of disaster aid from firms with local operations and at least 42% of that giving is related with the firms’ core operation get aid 260% faster and their annual growth of Human Development Index is 190% greater than for counterfactual countries with lower participation of economically affiliated firms.